Business Finance Analysis- Doc
Added on 2021-05-31
21 Pages4291 Words43 Views
RUNNING HEAD: BUSINESS FINANCEBUSINESS FINANCE
BUSINESS FINANCE1ContentsINTRODUCTION......................................................................................................................2RATIO ANALYSIS...................................................................................................................4Liquidity ratios.......................................................................................................................4Financial leverage ratios.........................................................................................................6Efficiency ratios......................................................................................................................8Profitability ratios.................................................................................................................11Market Value ratios..............................................................................................................14CONCLUSION and RECOMMENDATION..........................................................................16REFERENCES.........................................................................................................................17
BUSINESS FINANCE2INTRODUCTIONIn this assignment the performance of BORAL LIMITED AND ADELAIDE BRIGHTON of Australia is evaluated and compared through Financial Ratios. Both companies are operating under Cement Sector producing cement. Financial year 2017 is considered for the evaluation of performance of both companies and the financial statements are extracted from the Financial reports and from ASX website. Further the comparison is based on the five aspects such as liquidity ratios, efficiency ratios, financial leverage ratios, profitability ratios and market value ratios. The report has ended up with the conclusion and the recommendation to the potential investors about the fundamentally better company. ADELAIDE BRIGHTON LIMITEDAdelaide Brighton Limited is one of the prominent producer of lime and construction materials of Australia. The company is established in 1982 (Morning star, 2018). It is listed inAustralian market and its code is ASX: ABC. The main business activities of the company are importers, producers and the distributors of concrete, lime, cement, clinker, aggregates and concrete products (ASX, 2018). In this assignment, financial performance is analysed by considering 2017 financial year and there were approximately 1600 employees in all the Australian States and territories while promoting variety and morals at the workplace (Adelaide Brighton Limited, 2018). The main agenda of the company is to serve the shareholders, individuals better value. The CEO of the company is Martin Brydon (Adelaide Brighton Limited, 2018). The primary goals of the company are to offer turn-key results across the nation in order to ensure that customers’ expectations are unswervingly met. Adelaide Brighton Limited brands in three line of business are as follows:1.Concrete and Aggregates: HY-TEC, Direct Mix Concrete, Peninsula Quarries, Southern Quarries and Davalan Concrete.
BUSINESS FINANCE32.Cement and Lime: Swan Cement, Northern Cement, Adelaide Brighton Cement Limited and Cockburn Cement.3.Concrete Products: Adbri Masonry.BORAL LIMITEDBoral Limited is one of the international producer of construction materials and building products of Australia. It is listed in Australian market and its code is ASX: BLD (ASX, 2018). The main purpose of the company is to build best class quality and innovative building products and construction materials across international lands. The company is operating in Asia, Australia, Middle East, North America (Boral, 2017). In this assignment, financial performance is analysed by considering 2017 financial year and there were approximately 11499 employees which includes around 18% women workforce while promoting safe and rewarding place of work. The main agenda of the company is to serve theshareholders, individuals better value that exceeds the cost of capital. The CEO is Mike Kanewhereas Dr Brian Clark is the chairman of the company (Boral, 2017). Some of the key highlights of the company are as follows:1.To combine brick business in North America, Boral limited had an agreement with Forterra Brick for 50 percent joint venture.2.Boral limited acquired Headwaters Inc. in May 2017 for US $ 2.6 billion which supports Boral’s ability to deliver sound returns and also well affiliated with the considered objectives (Boral, 2017).3.In the year 2017, Boral limited had delivered 24.9% total shareholder return which is more than approximately average return of 16.9% for 100 Australian listed companieswhich is impressive.
BUSINESS FINANCE4RATIO ANALYSISRatio analysis is the quantitative analysis where performance of both the companies are assessed through financial ratios which determines the soundness of the company. For conducting ratio analysis, the data is gathered from the annual report and the comparison is performed between the companies. For this task, short term solvency ratios (liquidity ratios), asset utilisation ratios (turnover or efficiency ratios), long term solvency ratios (financial leverage ratios), profitability ratios and market value ratios are considered forthe comparison of both companies’ performance. Thus, Boral Limited and Adelaide BrightonLimited are fundamentally analysed. Liquidity ratios (Short term solvency ratios)Liquidity ratios analyse the company’s capability to pay the current debts as and when they are due and also analyse long-term liabilities when they become current (Morning Star, 2018). Thus, as a whole short-term credit worthiness position is evaluated from liquidity ratios. The most common liquidity ratios are:1.Current ratio: This ratio is the most common test of liquidity. If this ratio is greater than 1 then it represents that the current assets are able to come across its short term obligations. It is calculated by apportioning current assets to current liabilities (Morning Star, 2018).2.Quick ratio: This ratio disregards inventories because these are not easily converted into cash and thus higher ratio indicates better solvency position of the company. It is calculated by apportioning current assets (less inventories) to current liabilities.Thus, after the short description of liquidity ratios, two companies are analysed as follows:Adelaide Brighton LimitedLiquidity ratiosCurrent ratioParticularsAmount ($m)
BUSINESS FINANCE5Current Assets474.8Current Liabilities204.8Current ratio [CA/CL]2.32Quick ratioParticularsAmount ($m)Current Assets474.8Inventories174.3Current Liabilities204.8Quick ratio [(CA-inventories)/CL]1.47(Adelaide Brighton Limited, 2017).Boral LimitedLiquidity ratiosCurrent ratioParticularsAmount ($m)Current Assets1763.7Current Liabilities1468.3Current ratio [CA/CL]1.20Quick ratioParticularsAmount ($m)Current Assets1763.7Inventories606.6Current Liabilities1468.3Quick ratio [(CA-inventories)/CL]0.79(Boral, 2017).Adelaide Brighton Limited and Boral LimitedFinancial Year - 2017ParticularsAdelaide Brighton LimitedBoral LimitedCurrent ratio2.321.2Quick ratio1.470.79 (Refer: Excel Sheet)
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Corporate Accounting: Analysis of Boral Limited and Adelaide Brighton Limited | Deskliblg...
|25
|5150
|369
Importance of Management Accounting in a Manufacturing Organization: A Case Study of Adelaide Brighton Limitedlg...
|14
|2818
|358
Adelaide Brighton Ltd, an Australian cement importerlg...
|24
|6798
|162
Adelaide Brighton Limited: A Leading Producer of Construction Materialslg...
|18
|3414
|193
Finance for Business - Assignment Samplelg...
|20
|4212
|65
Financial Statement Analysis and Security Valuationlg...
|13
|3083
|38